TEMPO.CO, Jakarta - Bank Indonesia Governor Agus Martowardojo predicted that the inflation rate in the fourth week of July would stand at around 0.74 percent, lower than the one percent rate recorded in the first week of July 2016.
Agus added that the year-on-year inflation in July would stand at 1.8 percent.
"It reflects that Indonesia's fundamental economy is under control," Agus said at the BI Complex in Jakarta on Friday, July 29, 2016.
Agus revealed that the correction of commodity prices was the main factor of the declining inflation.
"We're still seeing a potential of inflation for onion and red chili paper prices. However, other commodity prices were corrected, causing a decline [in inflation]," Agus explained.
Agus added that stabilizing egg prices had also caused the inflation rate in the fourth week of July to decline. Agus expressed optimism that the inflation rate by the end of this year would stand at around four percent.
Agus added that the current account deficit to the gross domestic product (GDP) was predicted to remain below 2.2 percent, as the trade balance showed a positive trend.
By July 22, 2016, the central bank recorded a capital inflow of Rp 128 trillion (US$9.8 billion) as the market showed positive sentiment toward the implementation of the tax amnesty program.
"[The market] has also positively welcomed the cabinet reshuffle,"Agus said.
GHOIDA RAHMAH
